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How Are Organizations Ensuring Pay Parity in This Evolving Work Culture?

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Rashim Mogha - Customer Market Leader & GM, Leadership and Business at Skillsoft

18-Dec-2021

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The entire point of ensuring pay parity and closing gender pay gaps or compensating equal pay for everyone irrespective of their diverse background is to remove any underpaying instances. Organizations need to ensure pay parity by following a top-down approach.

What do L’Oréal, Starbucks, PayPal, and Adobe have in common? Apart from being leaders in their industry and loved worldwide, these brands were committed to resolving the age-long gender pay issue. Today, these organizations have achieved not only equal pay but also outperformed the competition. Yes, it’s been proven that companies with no gender pay gap have significantly outshined those with existing pay gaps in the workforce—quite an eye-opener for those who are yet to address this issue. 

Despite decades of effort, the inequality in gender pay still exists. It's startling to know that women earn approx. $407,760 less than men over the course of a 40-year career and according to the World Economic Forum’s Global Gender Gap Report 2021, another generation of women will have to wait for gender parity, and closing this gap has increased from 99.5 years to 135.6 years. It’s such a slow process that experts predict it might remain even after four decades. Several factors contribute to prevailing pay parity – from wage discrimination and career disruptions to having less support for better opportunities to facing bias of being less competent or qualified for a position. 

While progressive organizations such as Tata Starbucks, SAP Labs India, and Adobe India have contributed immensely to address the issue at large, the fact is that there’s a lot more to be done. Organizations should pay heed and be one hundred percent committed to this objective. There’s a lot that can be learned from the way these organizations have led the path. Here are the top ways:

1. Remove collegetiers criteria for salary determination: Companies which prefer hiring from Tier1 colleges eliminate a large talent pool in the hiring process without even evaluating it. In countries where investment in girl education is still an issue, this bias in hiring introduces pay gap very early in women’s career and this gap continues to grow over the period of their tenure. By eliminating the salary tiers based on college tiers, companies are now addressing the gender pay gap.

2. Steer clear of salary history: Asking for previous salary statements has been a norm in most organizations. However, new-age corporate giants like Starbucks and Apple have forgone these salary history requirements while recruiting new employees. A report by the United States National Women’s Law Centre (NWLC) highlighted that prior salary statements disproportionately negatively impact women’s current salaries. The same study stated that this recruiting practice forces women to carry the baggage of pay discrimination with them from job to job.  

3. Conducting gender pay-gap analysis: In 2017, LÓreal brought the French National Demographic Institute to conduct an in-house gender pay gap analysis and destroyed the barriers stopping pay parity. In 2019, Apple signed the California initiative promising to conduct a gender pay gap analysis every year voluntarily. These steps proved indispensable in ensuring that companies take adequate steps toward encouraging transparency and pay parity. 

4. Equal work for equal pay: In 1935, former IBM Chairman and CEO, Thomas J Watson Senior, in a benchmark statement, said, “Men and women will do the same kind of work for equal pay. They will have the same treatment, the same responsibilities and the same opportunity for advancement”. Though many corporate policies like these exist, IBM set a precedent for equal pay by issuing a letter later in 1953 announcing that hiring would be solely based on talent. Candidates won’t be judged based on their color, caste, or creed. Each year, the company follows a meticulous process to identify pay gaps and make immediate salary adjustments accordingly. 

5. Bringing the change from top-down: After separating from PayPal, eBay re-invented itself by bringing an all-inclusive change not from the ground level but the senior management positions. Leveraging diversity, equity, and inclusivity, the company started empowering employees from different ethnic backgrounds by simply assessing the innovation factor. It continuously creates significant shifts towards pay parity and creates an ecosystem where everyone can be paid an equal salary at the same grade level. 

The entire point of ensuring pay parity and closing gender pay gaps or compensating equal pay for everyone irrespective of their diverse background is to remove any underpaying instances. Organizations need to ensure pay parity by following a top-down approach. It’s their leadership that needs to ensure diversity, inclusion and parity are part of the company culture. To successfully create innovative solutions that solve real world problems organizations need to put a plan in place to provide equal opportunities, both from a growth and compensation perspective to women leaders. While many organizations are yet to inculcate this diversity of thought, there are those that have started taking inclusivity, diversification, and gender equity as more than just a way to restore balance. Organizations need to continue to invest in Diversity, Equity, and Inclusivity (DEI) initiatives to ensure they are inching toward the right direction.